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Coinbase Venture Funding Down 34% in Q2 of CY22

Crypto venture capital hit an all-time high in the first quarter of 2022, witnessing a slowdown in the pace of deals at Coinbase Ventures in the second quarter, with the total falling 34% to 47 deals from 71 deals. Coinbase Ventures is Coinbase, a venture-backed cryptocurrency exchange.

According to data published by The Block, venture capital investment in the blockchain space fell 22%, from $12.5 billion to $9.8 billion. This comes after seven consecutive quarters of increased investment.

The quarterly investment report released by Coinbase Ventures showed that activity in the second quarter rose 68% year-over-year, indicating overall growth in its venture capital business, albeit at a slower pace compared to the strong pace in late CY21 and Q122.

The drop-in venture capital activity was attributed to market volatility, with many founders reconsidering or pausing funding, especially at later stages.

Coinbase’s investment arm said: “We’ve seen many companies walk away from raising capital when it’s not strictly necessary, and even then, only when they’re confident they can demonstrate the growth needed for a new round.”

While the overall environment has been negative, Coinbase Ventures remains interested in certain projects, as seen in its investments in Web3/protocol infrastructure (38% of total VC investments) and platforms and development tools (21%).

“With an estimated 3.2 billion gamers worldwide, we strongly believe that Web3 gaming will be the next wave of crypto users. Web3 gaming remained a huge investment area in the second quarter, with The Block estimated to have raised over $2.6 billion,” Coinbase Ventures said.

The report notes that while centralised lenders indulge in opaque practices and misuse investors’ funds to make them insolvent, these entities have brought down the entire cryptocurrency market. In contrast, the report said that blue-chip DeFi lenders Aave, Compound, and MakerDAO are running smoothly, with each loan and its terms transparently on the chain for everyone to see.

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